107 | Wildfires, Verdicts, and Tariffs: Why Your HOA Insurance Costs Keep Going Up

107 | Wildfires, Verdicts, and Tariffs: Why Your HOA Insurance Costs Keep Going Up
Wed, May 21, 2025 9:47AM • 37:47

SUMMARY KEYWORDS

Insurance costs, wildfires, tariffs, liability losses, property maintenance, budgeting, communication, insurance policy, rate increases, economic losses, jury awards, community associations, insurance stability, rebuilding costs, board members.

SPEAKERS

Robert Nordlund, Kevin Davis, Announcer

Kevin Davis 00:00

You know, again, we knew about fires. We know wildfires, but what happened to LA was the most unique wildfire we’ve ever seen. I was there. I experienced your experience, and insurance said, Wow, we never seen anything like that. The wind blew it everything. And all of a sudden, now the shirt insurance companies going back there and saying, We never seen this before. How do we prepare for how we charge for

Announcer 00:22

HOA Insights is brought to you by five companies that care about board members, Association Insights and Marketplace Association Reserves, Community Financials, Hoa Invest and Kevin Davis Insurance Services. You’ll find links to their websites and social media in the show notes.

Robert Nordlund 00:38

Hi, I’m Robert Nordlund of association reserves, and I’m

Kevin Davis 00:41

Kevin Davis of Kevin Davis Insurance Services. And this is HOA insights. We promote common sense for

Robert Nordlund 00:47

common areas. Well, welcome to episode number 107, where we’re again speaking with insurance expert and regular co host, Kevin Davis, to make sure you have all the right information at the right time to make the right decisions for the future of your association. Every week, we want your association to benefit from the stories, the insights and the answers we’re able to share here, and this helps you our podcast audience to be well informed and to be well prepared for the challenging work you do leading your association. So today, we’re going to try to hit the nail right on the head and talk about high insurance costs and what you can do about it at your association, we talk about a lot of different topics here on HOA insights, but this may be one of the more consequential ones. So glad you joined us here today. Last week’s episode number 106 featured a great interview with Florida attorney Rob Webb, who shared many insights from his years serving and guiding boards, and some things residential boards can learn from his primary vacation ownership client base. Now, if you missed that episode or any other prior episode, take a moment after today’s program to listen from our podcast website, Hoa insights.org, or watch on our YouTube channel, but better yet, subscribe from any of the major podcast platforms so you don’t miss any future episodes, and those of you watching on YouTube, I’ll grab it here. Can see the HOA insights mug that I got from our merch store, which you can browse through from our Hoa insights.org website or the link in the show notes. We have some great free stuff there. It’s not all for sale stuff, but the free stuff is like the board member zoom backgrounds. And we do have some specialty items for sale, like the mug. So go to the merch store, download a free zoom background for your next board meeting, and then take a moment look around, find the mug you’d like, and if you’re the 10th person to email me at podcast at reserves ii.com mentioning episode 107, mug giveaway, and we’ll ship that mug to you free of charge. Well, we enjoy hearing from you responding to the issues that you’re facing at your association. So if you have a hot topic, a crazy story or a question you’d like us to address, you can always contact us at 805-203-3130, or email us at podcast@reservestudy.com and today’s episode comes from a question submitted by Jody from Chicago, Who asked, with rising insurance rates, we’ve increased our dues in January, but we’re thinking about doing it again before next year. Are other associations doing that? And again, it’s great to have Kevin here to address that exact question. So Kevin, welcome. What are we talking about here?

Kevin Davis 03:39

It’s excellent question, and there’s two answers to it, okay? Is the answer today, in terms of what we see right now, was all going to change in the next three months. Okay, so how are you going to tackle this answer? You want to talk about the future. We’ll talk about today. Let’s talk about today. Today, if you have an insurance policy, one thing that’s happened is that we’ve reached stability. Okay? Stability. That means, finally, the insurance carriers are out there saying, You know what, we think we can see the light at the end of the tunnel. So instead of seeing 30 40% rate increases, we expect to see around 10% that means anywhere between eight and 12%

Robert Nordlund 04:17

that means that, yeah, the premiums have caught up to the losses. So a insurance companies are finally like, Okay, we’re back in balance something like

Kevin Davis 04:29

that. Yes, exactly. So what happens when that happens is that you get more capacity comes in, because people are saying, guess what? Now there’s money to be made in insurance. So guess what? We feel pretty good. That is as of since January and the first three months of the year. And it could be tomorrow and the next day, the next day and the next day. Everything changes once that first quarter numbers get to the insurance carriers, and they’re looking at it right now, right now, every insurance provider is looking at. At their first three months and going, oh my god, oh my god, oh my god, oh my god,

Robert Nordlund 05:05

oh my god, good things are back to normal, or oh my god. Things are awful.

Kevin Davis 05:08

Things are awful. Oh, gee. So right now, if you have to have an insurance policy, you may get lucky to be in that eight to 12% range. So about average, about 10% but today, because the first quarter is over, January, February, March are over, and right now it’s April, and insurance carriers are looking at their first quarter results, and they’re they are panicking right now. They are very, extremely fearful of what they’re seeing.

Robert Nordlund 05:35

So we are recording this in April. I think this episode will drop in May or June, so things will even change. But Kevin, I gotta tell you, things have been crazy this year. Usually it takes Congress some time to make changes, but we’ve had a lot of presidential tariffs, here, tariffs, there, that kind of stuff. So there’s been a lot of instability. But first few months of the year, actually, I think of insurance problems as being hurricane damage, things like that.

Kevin Davis 06:02

And, yeah, what happened? What happened? January? Oh, gee, wildfires.

Robert Nordlund 06:06

Oh, gee, yeah, okay, right. Sorry. I’m embarrassed. I live in us. We both live in Los Angeles metro area, and Kevin and I know people who lost their homes, all right? So the losses have gone up, and the insurance companies are back to being nervous. Yes,

Kevin Davis 06:27

they’re what they’re seeing is things that are traumatic, okay? And again, what do we see? You mentioned two of them, right off the bat, the terrorists. The terrorists have said, What to us he had all those that fire damaged homes in Palisades, where our friend live at, where David and Sandra live, that right right now they have to rebuild. They get lumber where, getting lumber from, from Canada, all the refrigerators, you know, air conditioning, and get all the things that, guess where it’s going to come from, from China, you know. So guess what the cost right now to rebuild Southern California is so astronomical that we can’t even figure out what it is right now. So the cost to rebuild so right now, the number one problem that we’re facing that we didn’t face before we talked three or four months ago. And right now, every insurance is saying what’s happening right now in terms of the tariff, and terms of rebuilding, repair and replacing all of that damage that was done, that caused by the fire, is now we don’t even know how much it’s going to cost, and it could change from week to week. It could change from week to week, but we know right now it’s not going to go it’s not it’s impacting everything, and we know there’s terror is going to be out there. And we know the ones from China is that’s where we’re getting most of them are things, our refrigerator sites, all of our units, everything’s coming out of there, but just the wood, all the wood is out of Canada. You know, just when you pay, just everything that we need to to an insurance provider, when we have a fire, when everything happens, we got to replace property. Guess what? We don’t build anything, you know, without go out and get hammers. We everything gets important. The tariffs alone has is going to create. And that’s the number one area right now where every insurance provider carrier saying, Oh my god. How are we going to deal with them. So right now, everybody’s it’s not you don’t have enough insurance to pay for it.

Robert Nordlund 08:24

You got me thinking about my house here, my wife and I were going to build a outdoor workbench. And she brought that point up. You know, how much is this lumber going to cost? And for outdoor workbench, I figured 100 bucks. And she said, Well, figure probably 150 because of tariffs. Now, 100 250 no big deal. It’s still an all day Saturday project. But for a house, for air conditioners, yeah, for refrigerators, for roofing, you got me, you got me, wringing my hands here. And

Kevin Davis 08:57

one more thing about insurance, okay, is that you have what’s called, like an inflation guard, where they allow you to go over, but we don’t know how much that’s going to even go over. If the tariffs stay at 150% or 100 whatever it’s going to be. We just insurance right now, sitting in a room saying how much it costs us to repair, replace property, and we don’t know.

Robert Nordlund 09:19

And you guys, this apprentice is what underwriters do for their living. The way we do for

Kevin Davis 09:25

a living is we predict how much it gonna cost to repair, and what we do, we charge you for it. We say it will cost you $1,000 a year, because if your place burns down, we have any kind of damage that repair, replacement costs x number of dollars. Now of a sudden, oh, guess what, we charge you $1,000 but guess what, it’s gonna cost us, you know, 50% more than it did last year. So now all of a sudden, there has to be a rate gonna have to increase, just because of the tariffs, just because of the tariffs alone, rates gonna increase.

Robert Nordlund 09:55

You got me, uh, running out of words, but you’re right. Uh. Um, I think a lot of our listeners have been I think it’s accurate to say blaming the insurance companies, thinking that they are taking a lot of money, that they’re greedy, all that kind of stuff. But I am feeling sympathetic to the insurance companies, because they are taking a beating. They’re taking losses, and they’re trying to survive. And as a business owner, I know what my my cost of materials in my business is, employee salaries, but to be able to it be to be in a business where you wonder, what is your cost, and you go up and down with a presidential signature, 50% that’s scary.

Kevin Davis 10:44

They don’t realize that how much we get impacted. So now suddenly, the tariffs, one area that one happened in just a couple of weeks ago, has all the insurance executives sitting right now saying, what do we do? I mean, we thought we had a point in time where we had control over the things that caused us losses. Now suddenly, because of the tariffs, all of a sudden, we have a bigger problem, because we can’t predict. We can’t predict again, when this thing comes up in, you know, may say about 60th and whenever our this presentation comes up, yeah, we will know a little bit more than we do right now. Right now, we don’t know. We just don’t know.

Robert Nordlund 11:24

But I can see some executives sitting in rooms somewhere, conference rooms, saying, Hey Joe, hey Susie, hey Phyllis, Hey Fred, what’s your best guess? And I can see them just raising their hands up and saying, We don’t know. We just know that we’re taking a beating because of all the losses and because of the higher costs. Okay? So, yeah, we know that. We know the costs are uncertain and they’re going up, perhaps scary up. We’ve been talking about property insurance. Let’s focus this a little bit. Are we talking I know you’re a DNO insurance kind of guy, but you have your pulse on all of insurance. What are we talking about here?

Kevin Davis 12:02

Okay, good, glad you said that, because this is the question here. There’s two issues right now. Property losses is the tariff liability losses is something that is something we have not seen, but we’re seeing a lot of okay now, when we have a liability loss and that okay for the director’s loss, or you get an auto accident, or you have slip and fall, no matter what it is, or you’re sued by your people who live there because you’re a board member. Now, of a sudden, you go to a trial, and now there’s a jury award to you. Now, historically, a million dollar judgment is a lot of money, okay? Million Dollar. What happened over the past 10 years? We had something called the nuclear verdict. These are anything over $10 billion the nuclear verdict, okay? Today, today, we have something called thermal nuclear. Verdict, you’re

Robert Nordlund 12:54

inventing new words and

Kevin Davis 12:57

new words that’s anything over $100 million and guess what? That’s anything from $100 million but we’re actually seeing a handful of billion dollar claims, awards and judgments, okay, a handful of them in the past couple of years. That’s on top of so now we’re talking about these executives sitting in a room now and saying, We got a problem here. We had this major fire in Southern California, which is 270 $5 billion economic losses. That’s some last I looked it up before you know, we got out our costs with economic losses right now. 270 5 billion. That’s not insurable loss. That’s how much, if you total everything, the car everything, that’s total losses. This is businesses. So you’re talking about 270 5 billion nothing, nothing’s compared to that right now. So you’re looking at 270 $5 billion you gotta look at now to use a tariff based system to repair and replace the things out there and rebuild. Okay, so for this, from a property point of view, that’s that’s driving insurers crazy. Now you open up another door, which is having something called thermal nuclear verdicts, a word I just heard of about two months ago. These are verdicts that insurers or insurance companies are worried about, because we’re seeing things over $100 million and then we saw our first over the past couple of years. We have a handful of billion dollar losses. And one of those Monsanto, you have the Johnson Johnson, the baby powder thing, right? Yeah. I mean, those ones that we know about that as insurance. I’m worried about billion dollar losses, $100 million losses. What I’m worried about is a $10 million loss becoming normal, where $20 million loss coming normal, where historically, a $1 million loss was a big loss. Your insurance was a million dollar per loss per year. That’s what everybody that was a standard. You know, forever long as I’ve been in insurance, million dollar loss, million dollar. Annual aggregate. That’s what it was. And then your homeowners policy, yeah, $100,000 or $200,000 we’re talking about numbers that we can’t even understand from an insurance

Robert Nordlund 15:12

I started writing it down, and I take notes during our conversation here to try to stay on track, and I lost track of the zeros on the 270 5 billion, so I just wrote down B, I’ll look that up later. That’s just crazy. And it was 1200 homes, 1500 homes, something like that. Yeah. And here in Los Angeles, that was great. And we have an Olympics in a couple years, couple years, in 2020, years. Yeah, I’m glad I’m not mayor of Los Angeles. It’s

Kevin Davis 15:44

so many things happening right now from again, this just, this is, this is the past three months. Okay, you know, again, we knew about fires. We know wildfires, but what happened to LA was the most unique wildfire we’ve ever seen. I was there. I experienced your experience, and insurance said, Wow, we never seen anything like that. The wind blew it everything. And all of a sudden now the shirt insurance companies going back there and saying, We never seen this before. How do we prepare for how we charge for

Robert Nordlund 16:12

it? The wind was right. The weather was right. A reservoir was empty because it was being repaired. Yep, just a lot of individual circumstances that came together for something really bad. So we have verdicts are getting higher on the liability side. We have situations where we have homes in reasonable areas, well, I guess they’re next to open space, and so that makes them at risk for fire damage. But there are circumstances that can make them burn. We know what’s happening. What does an association? Is there any alternative to an association just stopping and like, who was it in the question here today? Jody from Chicago said, rising insurance rates okay in their board meeting, are they faced with the fact that they just need to look at each other in their conference room and say, you know, folks, we need to go up again from 550 a month to, who guesses 606 50 to be able to pay for insurance? How do they? How do they deal with this? That’s the

Kevin Davis 17:22

best thing right now. What my goal today is say everybody was listening. Be aware this happened in the past three months, six months ago, four months ago, we talked about this year, and we thought we have a stable year, stable very, very stable year. We thought that the rates were and claims and again, guess what? We had disaster of last year. We had a lot of disasters last year. And what we said, Okay, we got it now we can figure it out. We Okay, and we’re talking about stability now. Now we’re reaching uncertainty and instability, which create fear in insurance companies. So that means is that we don’t know what we’re going to see in another three months by, by the summer, we don’t know what’s gonna look like. So my suggestion, off the bat is you have to be prepared. Board members, you have to be prepared. You have to say, You know what we are. Have to budget for the rate insurance rates gonna go up more. Okay? I would say right now, if you go for 15% rate, you’d probably be pretty safe, until we get the message that, guess what, that’s not enough, okay? Because the tariff may come down, okay? They may end up only paying you know, you have 270 $5 billion in that fire loss, but we don’t know how much of that is insurable, okay? Because a lot of it, what you got is not uninsurable. Okay, so we’ll know more in another couple of months where I go, guess what? A lot of that wasn’t insurable. The tariffs, not that bad. So we’re going back to what we felt before. And you know, liability can change. In other words, those big claims, what can happen? You can get a jury pool that comes in and go, No, especially our society. Our society is changing. Where are we going to still award these big juries? Do we? You know what’s going to happen, and things can change rapidly. In three months, where in June, it’ll be, everything be okay? You know? Because we know that. You know, every day to day, things change, but by June, we can, we all, all can be over, and we can say, Guess what, we survived the past three months, the second quarter, and the claims weren’t that big. That’s what we thought it would be. The tariffs wasn’t that big. And guess what, there’s been no more billion dollar awards, or $100 million awards. They drop back, if that happens. Guess what? Now we’re talking about going back to a stable certainty market, where we’re looking at it, we’re feeling like, okay, there’s certainty in here. And we can go back to, you know, maybe a 10% round average, around 10% based on where you live. However, it goes back to the one simple thing you got to be aware and look and see. Right now, insurance companies are not making money. You know, they understand what they need to do, but it is challenging right now because of what they’re seeing out there. It’s different. It’s really different than we’ve ever seen before.

Robert Nordlund 20:14

Kevin, twice a week the dry cleaners pick up from my house, and I just know that if you know they use some kind of chemical in dry cleaning our shirts and then pressing our shirts, that kind of stuff, if their chemical costs go up, then my dry cleaning costs are going to go up. That’s just the way it is. Yeah, and for the for you to say the insurance companies are taking losses now, that’s just like the dry cleaners saying, Hey, Mr. Nordlund, the your shirt used to be, I don’t even know what it is. Fortunately, it used to be 10 bucks a shirt. Now it’s going to be 12 or 15. What am I going to say? Yeah, I’m Yeah, I still need, I still need my shirt strike clean. So there, yeah, there are costs, but there’s

Kevin Davis 20:57

one thing you can do. We talk about things you can do about it is and you’re talking about that’s a really good example of your dry cleaner. You can make decisions and say, Okay, now maybe I can go once a week instead of twice a week. Okay. Now, so the same thing with the insurance side. You know, this is the time you need to sit down with insurance person, your agent, a broker, and say, look at this and see where can I save money. What can I do to make this thing more less expensive than it is right now? Do you have to take ownership of your insurance policy? That’s the one thing you got to do. I think

Robert Nordlund 21:32

we set the table here in the first half. Let’s take a quick break to hear from one of our generous sponsors, after which we’ll be back to hear more common sense, for common areas, to hear about what you can do and what control you have at your association. Hi, I’m

Kevin Davis 21:47

Kevin Davis, the president of Kevin Davis Insurance Services. Our experienced team of underwriters will help you when you get that declination. We provide the voice of reason, someone who will stand by you. Our underwriters are bringing years of knowledge to our clients that can’t be automated by technology or driven by price. As a proud and wins company, we bring true value to your community association clients. We are your community association insurance experts,

Robert Nordlund 22:14

and we’re back. Okay? It was a pretty sobering first half of this program. I know costs are going up. It was scary to hear that there’s so much uncertainty. But Kevin, I want to stand on firm ground you talked about. I can at least choose how many times I’m going to have my shirts dry cleaned. I can choose how often the pool service comes and services are pooled per week, things like that. What control do board members have over their insurance premiums? I

Kevin Davis 22:50

would say there’s a four step process they have to take. Okay? Step number one is be aware of what’s happening out there. Okay, leave your eyes open and say, Okay, I understand right now, insurance, it’s tough out there. It costs a lot of money to repay. Every place, it costs a lot of money to defend, and if it’s a judgment, so we I get it now, so now that we will wear second thing we need to do is get an insurance professional there and say, Let’s go through the insurance policy, okay, where? What am I missing? What can I alleviate? And so you really can understand what you’re buying out there. Okay, so

Robert Nordlund 23:31

if you don’t have a pool, you don’t need drowning insurance. If you don’t have waterfront, you don’t need something to do with dock or rising sea levels or something like that. Is that what you’re talking or

Kevin Davis 23:44

what you could do something more so is that I’m gonna put a higher deductible of certain things? Okay, so you’re looking at it, so all of a sudden you say, well, listen, we have a lot of water problems right now. But guess what? We have a system now in place, which shows me if there’s water leakage, if this So, guess what? To save money, I want to go for a higher deductible on water damage claims. I want to look at what I have, what I’m insuring, because what Ed understand that there’s insurance and there’s maintenance, because the first call I get normally is that my roof is leaking, put in a claim, okay? And you go, Wait a minute. Why is your roof leaking? You know, it because of an occurrence or because of wear and tear. And guess what? Because it’s

Robert Nordlund 24:29

a 20 or 25 year old roof. Exactly, dummy, yeah, exactly. I said that actually,

Kevin Davis 24:40

sarcastically, but, but it’s true, though. That’s true, and that’s the problem. What happens is that, if you don’t understand what your insurance provides coverage for, and you call up your insurance person and put a claim in for something that’s not a covered loss, they guess a check mark next to your name, okay. Check marks. Okay. You know, understand the difference between what. You have to maintain, and what you have to ensure. And that’s when you’re sitting now insurance professional and saying, Okay, we want to make sure we’re insured things that we should ensure from that is an accident, something occurring that that we’re not prepared for a non maintenance issue. And sometimes what they do, the condo boards look at it as because we maintain it, we have to insure it for maintenance issues, and that’s where the problem comes into play, because now you start seeing maintenance issues claims, and that’s why your rates go up. Once you understand your insurance in terms of maintaining versus insurance now the sun, it goes back to that awareness. Now I’m aware so that I’m not putting claims out there that should not be covered.

Robert Nordlund 25:42

Now you’re feeding into my narrative. I like seeing my clients taking good care of their property, a property well cared for. They’re going to have, and I’m using round numbers 20 years, where their roof serves them well. They’re going to have the iron work fence around the pool be stable and sturdy, and so little Johnny is not going to be running and slip and fall and bang into the iron work and hurt themselves, because something is there and it’s stable and it’s not breaking and cracking, or a balcony railing, things and or maybe a gate that’s supposed to keep people in or keep people out, staying on top of maintenance prevents higher costs of deferred maintenance and prevents people, boards, homeowners, from calling their insurance agent when they really should have fixed it for 100 or 500 bucks. Let me add

Kevin Davis 26:35

one more part to it is that now the sudden, because you haven’t fixed it, semi trips and falls, those are my drowns. And now we go to the liability side, where somebody say, okay, because that person drowned, I want 20, $30 million I suppose, historically, and maybe a one or $2 million drowning. So what you’re going to do is say, well, guess what? We did our job. We maintained the property enough, so now we have a defensible position. And that’s the key, if you maintain the property, okay, so not only you’re looking at a lower insurance rate, but we are sued because there’s trip and fall or drowning, you say, Wait a minute. We maintain our property as outlined in the governing documents or in our maintenance plan.

Robert Nordlund 27:15

And the jury hearing that will say, Well, gee, the Board did everything they can and everything, everything they could, everything they should have. And so the person is asking for 10 million. Obviously they drowned, but we’ll give them 1 million, not the $10 million

Kevin Davis 27:29

verdict, exactly, or because you didn’t do it the right way. Now that 10 million goes to $100 million was now sudden, you did something so egregious you knew the gate was not there. Well, with that fixed property didn’t close properly. So now, so you’re talking about a major loss right there, because there’s a record. We’re talking about two areas now, yeah, we’re talking about the property in terms of maintaining the property, so that, you know, it looks nice, and you maintain it, because it’s your job, but it’s like, it’s hurt. The difference between being a couple of million dollars versus, you know,

Robert Nordlund 28:01

a lot of millions of dollars. Yeah, you don’t want a line item in the meeting notes saying that we didn’t fix that gate because it was going to be $100 yeah, don’t want to be cheap. And someone will say, for 100 bucks, my little boy drowned. That is, yeah, it’s a bad luck. Okay. Hey, help me stay on track. Here, you said you had four things. Number one was, don’t be surprised. Number two,

Kevin Davis 28:27

talk about the insurance person and learn to understand it gets understanding. Third thing is budget. Budget for it. Okay? The one thing that community association can do that we can’t do, right? When something virtually happens to us, guess what we gotta do? We got to do? We have to go to bank, get loans. Commissioners can budget and say, Guess what? We know this is the cost of next year. We want to budget for it today. Get the money up front, you know, and budget. So just really budget by talking to the insurance professional and saying, What do you think is going to happen? Okay, right now, we’re not sure, but 10% is okay. But in three months from now, call me again and we’ll let you know a little bit more.

Robert Nordlund 29:06

I’m gonna say Quarterly Review. Is that fair? Well,

Kevin Davis 29:09

I would not say, because depends on when insurance policy comes up. You know, you gotta prepare if your short insurance probably comes up later on this year, I would say, talk to your insurance. You know, about 30 days, 90 days before it comes out. Sit down, because, guess what? It’s going to change. Right now, everything can change in 90 days. You know, things a lot different. 90 days for your insurance. Sit down with your insurance professional and say, What do you think? What do I have? Yeah, how can I save money? I don’t want to limit coverage. For certain coverage, I can limit, you know, do you really need a massive umbrella policy? You know, some, some of the association has $100 million umbrella policy. Do you need one? Well, I hate to say you don’t need one, but if you’re doing the job, you’re maintaining it properly, maybe you can say I don’t need a. Be really high limit on my umbrella policy. Maybe I need a $5 million because we are focusing on maintaining my association, that we have the kind of issue that the association across the street has,

Robert Nordlund 30:11

that’s a situation where spending money saves money. Say you are running a tight ship there at your association, then all of a sudden some of these other costs go away or get reduced. I’m also thinking that just as those insurance executives were in those board meetings unsure about what was going to go on and so they have to hedge up. Julie adamant talks so much about communication and how you can’t do it enough again. I’m not sure exactly when this episode will drop, but it will be May or June, and it may be early enough, or even wherever it falls in your budget year, it may be time to add a note in your communication with the homeowners that, hey, insurance continues to go up. Expect an increase next year. Alert them, let them. Don’t drop it on them at the last minute, but start to prepare. Prepare the soil. Is that fair? And

Kevin Davis 31:08

it’s number four. You just name that for communication with number four. Okay, once you get the information, once you become aware, you have to communicate to the people. You have to let them know what’s going on and why. What we don’t do enough of is say, why? What we do is say those insurance people are the bad guys. They’re ripping us off. I can’t believe they’re doing it. Okay. You got to say, Listen, this is what we heard. This is what we see to repair, replace. Anything is more expensive than it ever has been before. Now, let me go to tariffs, but inflation and everything. It’s just cost. Everything costs more money in a day to have before that’s the reason why rates are going up. Another reason why, because there’s something out there, these verdicts that we see about all the time. Hey, you know the number of lawyers that are out there now since COVID? You know, we looked at the numbers of people who went to college during COVID and got a law degree, and there’s so many lawyers out there right now, and so many things happen on that law side that are really focusing in on those, what I call thermonuclear verdicts, because guess what, if you have $100 million verdict, guess what? You have a lot of happy lawyers there. Communication is the key. You have to let people know what’s going on. All

Robert Nordlund 32:25

right, so there are things you can do to get on the good side of the equation. Take good care of your place. Have clean records show that you’re doing what you can communicate all those kinds of things. And yeah, like you say, maybe things will settle down economically. Maybe the verdicts will settle down with people appreciating that, gee, the association doing the right thing, and the person at fault had some fraction of responsibility. So what I’m hearing is there’s no magic. It’s almost like doing common sense things exactly,

Kevin Davis 33:04

and that’s okay. Guess what? At the end of the day, you know you can’t decide. You can’t put your building up and live in an area where there’s no fires. If there’s fires, there’s fires or earthquakes or floods or whatever, this you can’t do anything about that. If you have a 30 year old building and roof is all. You know what? You got 30 old building, and you can’t do anything about that. You know, the roof is old, but it’s the one thing. Only thing you can do is maintain your association. Just that’s it. If you maintain the association, is the one area of control over. You can’t control anything else around there, but you can maintain it. And if you focus on maintaining your association, guess what’s going to happen? Your insurance person, your insurance agent, will look at your place and go, You know what? Let’s try to get you a better deal. Because you’re focused in on things that are important, the things that are really matter you can’t control. Yes, you live in a fire zone. You know? It’s interesting. What happened is, there’s a fire zone in California, right? Well, guess what that fire zone is spread. We need to wear a not fire zone now map, because it is just spreading and spreading and spreading to the point where it’s like, what is it a fire zone? It’s a fire zone. So, yeah, California is it’s gonna be hard. It’s gonna be tough. You live in California, especially southern California, because of that fire really is challenging. However, it may not branch out to other areas and may not branch out into areas where there are no fires. We don’t know. We’ll know again. I guess we’ll come back again in three months, Robert and we’ll do an update and say, Guess this is where we at right now. I guess we’re gonna have to do that. We will learn more in three months. Number one, you and

Robert Nordlund 34:45

I do this regularly at work, so we’re going to be back and the we know the situation is going to change, and we’ll provide you our audience with the latest information. So Kevin, it’s always great talking with you this timely conversation. And. Any closing thoughts to add at this time, maintain,

Kevin Davis 35:02

maintain, maintain and awareness. You got to be aware. And when you explain, you explain why, why are the rates going up? And you got to say the reason why? Because the repair or replace has costs more money than ever before, not only we talking about inflation, tariffs, all that stuff that, yeah, the sheriff executives right now, or and conference calls saying, what do we do? And we don’t know. We don’t know right

Robert Nordlund 35:29

now. You know the way you’ve explained it here. I think your homeowners will understand that with the uncertainties with the wildfires in Los Angeles, the tornadoes that will happen, the ice storms that will happen. Everything is expensive. And taking good care of your place and communicating clearly to your homeowners. This the cost of living in an association nowadays, it’s going to be the same whether you’re in our association or another Association, or you have your own single family home somewhere. So it just is a rising cost out there to our audience. We hope you learn some HOA insights from our discussion today that helps you bring common sense to your common areas. That communication tool we hope you’ve given, given you some real talking points. So thank you for joining us today. We look forward to bringing many more episodes to you, week after week after week, we will be here, and it’ll be great to have you join us on a regular basis. Spread the word

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